Airbnb’s regulation conundrum in SA
As Airbnb disrupts property and hospitality markets around the world, it is facing increasing calls for regulation. The situation in SA is no different …
Online home-sharing platform Airbnb’s growth story has been nothing if not dramatic. From just two bookings in March 2008, the San Francisco start-up today has more than 5-million listings in 81,000 cities around the world.
This growth has not gone unnoticed. The platform has disrupted property markets, pushing up prices for long-term rentals as property owners make accommodation available for short-term lease. As a result, several cities, including New York, Amsterdam, Barcelona, London and Berlin, have moved to restrict Airbnb rentals by setting limits to availability and requiring registration from hosts.
But a paper by Shirley Nieuwland and Rianne van Melik, academics at Radboud University in the Netherlands, questions the effectiveness of such regulation. It says regulating Airbnb is difficult because it requires private hosts to be held responsible rather than businesses — something that is hard to police.
Nieuwland and Van Melik say approaches vary from full prohibition to a more laissez-faire approach. Most cities opt for "limitation with restrictions", which includes limiting the number of short-term rental options available (Barcelona allows for one listing per property owner) or the number of days properties may be rented out (Amsterdam limits rentals to 30 days a year), or only allowing short-term listings on residents’ primary residences (Los Angeles).
The growth of Airbnb in SA has, predictably, elicited calls for tighter regulation. But unlike elsewhere, where calls for regulation seem to stem from disruption of the long-term rental market, in SA the focus seems to be on levelling the competitive playing field.
Not that Airbnb hasn’t affected the property market here. The rental market in Cape Town — which has about 16,700 active Airbnb listings — has in the past nine or 10 months experienced its first major price correction since 2008, says Re/Max Living estate agent Michael Hauser.
These accommodation providers contribute to the fiscusTshifhiwa Tshivhengwa
"[In that period] rental rates often had to be advertised at 20%-30% below the previous year’s rental amount. This is owing to an oversupply of rental properties currently on the market," he says.
In part, this is thanks to a number of new developments in the city. But it’s also because tourists postponed their trips to the Western Cape as a result of the drought, prompting Airbnb hosts to put their flats up for long-term rental.
But it is the tourism sector that has been most vocal about regulation — particularly the Tourism Business Council of SA (TBCSA), which represents companies such as the City Lodge hotel group, Avis, Bidvest Car Rental, Legacy Hotels & Resorts and Tsogo Sun. TBCSA interim CEO Tshifhiwa Tshivhengwa says the body wants Airbnb to comply with the same regulations that apply to hotels, B&Bs, guesthouses and resorts.
Tshivhengwa says the government should regulate the platform to ensure compliance with municipal bylaws around short-term rentals, as well as regulations around alcohol licences, food safety and taxation. "It is the responsibility of municipalities or relevant authorities to ensure that all regulations achieve what they are meant to achieve."
According to Jean-Pierre Smith, Cape Town’s mayoral committee member for safety, security & social services, the city’s environmental health bylaw regulates premises that let out more than five beds or three rooms.
"These premises are considered to be accommodation establishments and must comply with the requirements as listed in the bylaw. However, all persons preparing and selling meals must comply with the requirements listed in the regulations governing general hygiene requirements for food premises and must apply to the city for a certificate of acceptability to prepare meals on site. A business licence is also required. In this regard, premises will have to satisfy town planning, health and fire safety requirements," he says.
What it means
In SA the call for regulations has come from the formal tourism sector
However, given that the average Airbnb rental for the city is for 2.1 bedrooms or four guests, according to data website AirDNA, most Airbnb rentals would seem to fall outside the requirements of "accommodation establishments".
Current property rates would also seem to favour Airbnb hosts over traditional service providers. Johan van der Merwe, the finance member on Cape Town’s mayoral committee, says lodges and hotels in the city pay property rates based on their municipal property valuation — charged at R0.013434 against every rand of the property’s value — as well as commercial tariffs applicable to electricity, water, sanitation and solid waste.
"Airbnb establishments, if they are zoned as residential — as they would be in the vast majority of cases — would pay residential property rates. Currently this is charged at R0.006717 against every rand of the property’s value. They would also pay applicable electricity, water, sanitation and solid waste tariffs, but would most likely pay for services according to one of the city’s residential tariffs rather than one of the city’s commercial tariffs," says Van der Merwe.
There’s also the issue of tax. Tshwane University of Technology tourism lecturer Unathi Sonwabile Henama believes Airbnb hosts should pay tax in line with SA laws.
"Our legislators must work with Airbnb to create legislation that would ensure Airbnb pays tax," says Henama. "But the legislation must be forward-looking and not seek to destroy Airbnb’s success. Airbnb has lowered the costs of doing tourism entrepreneurship and therefore created jobs."